Local structure of the nanostructured LaNi 5 alloys, prepared by ballmilling, has been studied using La L 3 -edge extended x-ray absorption fine structure spectroscopy. The near-neighbour distances tend to decrease with the ball-milling, and the mean square relative displacements (MSRD) show substantial increase suggesting an increased atomic disorder. High temperature annealing helps in partial recovery of atomic order in the ball-milled samples for milling times upto 20 h, however, the long-time ball-milled samples seems to gain only a local random order. The results suggest that reduced unit-cell volume together with large atomic-disorder might be causing a higher energy-barrier for the hydride-phase formation in the long time ball-milled LaNi 5 powders.